West Midlands Police said a loud bang heard by residents in the Caldmore area of Walsall late on Friday "appeared to be consistent" with the device exploding, and are treating the incident as a hate crime.

No one was injured and minimal damage was caused around the device, which was found by a member of the public in an alleyway adjoining the Aisha Mosque and Islamic Centre.

The item had been found on Friday and taken inside the mosque by a well-meaning member of the public, a police spokesman added.

Assistant chief constable Sharon Rowe said in a statement: "The force is taking this attack against the mosque very seriously and we have a major investigation under way.

"To that end, I have called in support from all over the force, including the West Midlands Counter Terrorism Unit, which has a number of experts supporting the inquiry.

"Specialist investigators have been working all day and continue to ensure that we maximise every opportunity from the crime scene."

The senior officer added: "At this stage we are keeping an open mind on a motive, but have recorded it as a hate crime."

Speaking at the scene, superintendent Keith Fraser, the head of crime and operations for Walsall Police, said: "At around 10.15pm on Saturday, police were called to Aisha mosque in relation to a suspicious item that had been found.

"The force are taking this extremely seriously.

"We have launched a full investigation into the suspicious item that has been found, and what's going to be the key to this is the public's help in relation to helping us to understand why that suspicious item was in the area."

Police said officers have increased patrols in the area and around all places of worship, although the incident is believed to be isolated.

A 40-metre section of Rutter Street, in the Caldmore area of Walsall, remained cordoned off earlier and two uniformed Army personnel were at the scene.

Police investigators were also outside the Aisha Mosque and Islamic Centre, including one officer wearing a blue full-length forensic suit, who could be seen taking photographs of areas of interest near the building.

Ali Mahmood, the chair of the local traders' association, said local people had been given no details of the nature of the suspicious item.

"It's a very big shock for the local community," he told reporters. "To see the road cordoned off like this is shocking."

About 80 people evacuated overnight were given shelter by Walsall Council, while 70 residents made arrangements with friends or family.

Viyja Kainth, the vice-chairman of Palfrey and Caldmore Neighbourhood Watch and residents' group, praised the work of the local authority in helping to provide accommodation to those forced to leave their homes.

Mr Kainth, who also thanked members of the St John Ambulance for their help, said: "We were told by the police that there was an incident of a serious nature.

"The residents were evacuated in the early hours of the morning when the council put in place its procedures.

"I must say that the council did a good job in getting their resources and staff together to provide that service.".

Police have appealed for anyone with information to call 101 or Crimestoppers 0800 555 111.